What is WTO GATS Mode 4?

GATS stands for General Agreement on Trade and Services. This is a treaty under the control and part of the WTO .

The GATS defines four modes of trade in services. Mode 4 refers to the temporary migration of workers, to provide services or fulfill a service contract. Because the current framework of Mode 4 allows for only temporary movement of workers across borders to provide services, and their visa as well as their right to stay and work are tied to their original terms of employment or contract and to their employer.

The WTO is basically negotiating a global guest worker program.

Public Citizen has a good backgrounder on where things stand now with this desire to trade people as services, yet, will this change?

Here are some recently press reports, most notably India, demanding to trade people via guest worker Visas be included in the next round of trade talks.

- Some developing countries like India and China have a big interest in seeing progress in one area of services -- liberalisation of the movement of labour for people to travel to fulfill contracts, known as "Mode 4".
- India also wants a discussion of services at the Easter (WTO) meeting because of its big IT, business process and outsourcing sectors

The country is looking forward to easing of restrictions in the temporary movement of workers and professionals (mode 4) to other countries and securing business flow in the outsourcing segment (mode 1) in the services negotiations.
India said the stand taken by some that the services negotiations concern a sub-set of members and that such members should seek assurance from each other was not the way India looked at the negotiations

The US said it wanted value-addition in the services text by including clear language about binding current market access commitments in square brackets, while Brazil said the US must discuss with its Congress whether it is ready to address the issue of Mode 4 concerning the short-term movement of services professionals, arguing that the level of ambition in services must be on par with what is being done in agriculture

India wants to know what it is going to get in the movement of short-term services providers under Mode 4 and removal of restrictions on cross-border services.
Up until now, the US maintained that it could not provide much access in these two areas because of opposition from its domestic constituencies.
“We, therefore, urge you to propose a structured discussion to address this need,” India’s trade envoy said

And it's not just jobs they are trading, look at the globalization agenda of higher education, Global U:

The World Trade Organization has been pushing trade-services liberalization for several years, of which higher-educational services are a highly prized component, with an estimated global market of between $40 billion and $50 billion (not much less than the market for financial services)

So, the educational "market" is 2.5 trillion and rivals the financial services market. Great our US taxpayer dollars are going to help universities turn into for profit business entities where the student is now the product.

What does this mean? It means that the WTO has pressure and an agenda to supercede US domestic immigration and guest worker Visa policy, claiming trading people are simply services to be traded and that means global labor arbitrage

Think it's about immigration, moving to a new country, adopting it as one's one? Think again.

Workers under Mode 4 are not granted access to the local labor market. They must either be employed by a foreign firm with commercial presence where the service is provided or be under a contract for the provision of a service.

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but how the game currently is...India establishes contract body shops in the United States, as a foreign controlled corporation, brings in guest workers and then turns around and contracts them out to US domestic corporations, displacing US workers. So they clearly have access to the local labor market, no problem and on top of it, take wages that were from US domestic operations and move them to a foreign subsidiary, while that US corporation now has the expense of a large contract award only. Wala, no employees or direct contractors. It's pure labor arbitrage and these Indian body shops are making a huge profit from it. Basically obtain a large contract with a US domestic firm, make huge profits and simply provide workers are much lower rates than US workers.

7 out of the top 10 H-1B Visa applicants are these India body shops, so this is already going on even with the 75k H-1B Visa cap and also with the L-1.

Even worse these same body shop companies, these 3rd party contract houses have offices offshore and often they use this method to obtain training from US workers and expertise then....wala, the entire project, division, service is moved back offshore to their even lower cost Domestic (in that country) headquarters.

Even worse, one has interjected a "middle man" business by this set up, these body shops...that is simply making huge profits off of the backs of workers, a complete business model where profits are pure wage arbitrage.

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The scary part is how these people are used by the body shops- they're often paid in their home currency, at home rates, and housed in company housing. Infosys gets about a 75% cut off of an L-1 visa holder, in comparison to a 66% cut off of an H-1b.

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Moral hazards would not exist in a system designed to eliminate fraud.

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Workers under Mode 4 are not granted access to the local labor market. They must either be employed by a foreign firm with commercial presence where the service is provided or be under a contract for the provision of a service.

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